Manufacturers, Histadrut to fight car leasing changes

Joint strikes considered to protest planned reforms.

The Histadrut and the Manufacturers Association of Israel are beginning a common public struggle against the Finance Ministry's plan to double the use value worth of vehicles salaried employees receive from their employers. The Histadrut and MAI will use all legal means at their disposal in order to prevent harm to employees and employers if the Treasury's plan is implemented, Histadrut Chairman Ofer Eini and MAI President Shraga Brosh said this week. Last week, the Bachar Committee, which was appointed by Finance Minister Avraham Hirchson to examine the issue, ended the hearing process. According Eini and Brosh, the Finance Ministry's plan would cause harm totaling about NIS 1,000-1,500 per month to every employee who receives a vehicle for use from his or her employer, when the marginal tax rate applying to the employee is 36%. Furthermore, the employer would be forced to pay about a NIS 30,000 a year added cost for that same employee. This added cost is estimated at about NIS 500 million annually for industry as a whole. Eini and Brosh said that doing away with the vehicles could cause delays in dealing with malfunctions and in providing services to households, plants and the entire economy. The resulting monetary damage is liable to reach into the hundreds of millions of dollars. TheBpost has learned that the Histadrut and the employers' organizations are considering embarking on joint strikes in the context of their fight against the Treasury's plan, and are also planning an advertising campaign against the reform. According to Brosh, there is no real need now to raise the tax, since the Tax Division is experiencing a surplus in collection. Another fear is that employees may demand a salary supplement to offset the harm they would incur. A week ago, Federation of Israeli Chambers of Commerce President Uriel Lynn appeared before the Bachar Committee and also expressed his opposition to the Ministry's plan. Lynn noted that the plan would eliminate the reform in direct taxation for employees who receive a vehicle for their use. He believes that the additional tax would be imposed on some employees who cannot purchase a vehicle and whose pay puts them into the middle class, such as technicians and service people, and for whom the vehicle is needed for work purposes. Lynn further said that as a result of the plan employers would be harmed who thus far did not gross up the value of the benefit, and who now would receive demands from their employees to compensate them or to gross up the additional tax. The Bachar Committee will submit, in the near future, its recommendations to Hirchson, who will bring his decision on the matter to the cabinet and the Knesset.